The huge natural gas discovery in a Mozambique block where Bharat Petroleum Corporation (BPCL) and Videocon Industries are partners, will be turned into LNG at a plant to be jointly built with neighbouring gas field operator Eni SpA of Italy.

Anadarko Petroleum Corp, the operator of Offshore Area 1 where BPCL and Videocon hold 10% each, and Eni will join forces to build a single liquefaction plant that will turn gas in the two fields into liquid so that it can be exports in cryogenic ships.

The plant in the Cabo Delgado province in northern Mozambique, is scheduled to start operating in 2018 with a capacity of 20 million tonnes of liquefied natural gas (LNG) per year, Anadarko said in a press statement.

The capacity will be split evenly between the Anadarko-led project and Eni's development of Offshore Area 4.

The two companies will conduct separate yet coordinated offshore activities.

The LNG complex will in time have capacity to produce about 50 million tonnes of LNG a year, Anadarko said.

Anadarko said Heads of Agreement (HOA) have been signed with Eni "establishing foundational principles for the coordinated development of the common natural gas reservoirs spanning both Mozambique's Offshore Area 1 (operated by Anadarko) and Offshore Area 4 [operated by Eni]".

"The HOA is designed to facilitate a work programme whereby the two operators will conduct separate, yet coordinated, offshore development activities, while jointly planning and constructing common onshore liquefaction facilities in the form of an LNG park in the Cabo Delgado Province of northern Mozambique," the statement said.

Two major natural gas discoveries have so far been made in Offshore Area 1 of Mozambique's Rovuma Basin. The Prosperidade complex is estimated to hold between 17 and 30-plus trillion cubic feet (Tcf) of recoverable natural gas while separate and distinct Golfinho/Atum complex is estimated to hold 15 to 35 Tcf of recoverable natural gas resources.

Evaluation of a third discovery on the block, Tubarão, is ongoing with an appraisal well that is expected to be drilled in early 2013.